Finance Minister, Seth Terkper has defended the continuous imposition of levies on the energy sector as part of efforts to address major financial challenges facing some State Owned Enterprises (SOEs) within the sector.
According to him, the levies will provide revenue to offset the about 1.2 billion cedis debt owed by institutions including the ECG, VRA and GRIDCO
Although government is still charging Ghanaians to pay off the TOR debt recovery levy introduced in 2003, Parliament in December last year, also approved the energy sector levies bill which saw the imposition of about 27 percent on petroleum products.
The move has since its implementation been met with public uproar following the increased prices of some petroleum products.
But addressing journalists on major developments within the economy, Seth Terkper insisted the levies are needed to make the State Owned Enterprises financially stable.
“We had a TOR levy but along the line we were also paying less for petroleum when TOR was supplying and we were accumulating subsidies, so the debt continued. We also brought in BDCs and we owed them Forex losses as a result of subsidy,”
“So if the policy variable underlying the situation does not change, you cannot have the desired effect, hopefully we can now sustain the automatic price adjustment and the liberalization and the mitigation and stabilization accounts that we can put in place,” Mr. Terkper stated.
Improved economic prospects Meanwhile the Finance Minister says he is optimistic of an improved economic performance following some marginal gains within aspects of the economy.
According to the minister, government’s ability to reduce the fiscal deficit from about 11 to 7 percent; a reduction in expenditure on public sector wages as well as a stabilizing inflation regime will result in economic growth.
Contrary to doubts by some analysts on government’s ability to further reduce the fiscal deficit this year, Seth Tekper believes the market will witness marked improvement with the implementation of robust economic policies.
“The fiscal deficit on an adjustment basis was 11.5 percent before the IMF program. By 2015, we expect it to slow down by 7 percent. The interest rates on the Treasury Bills which was at 25.8 percent has also been going down. Inflation used to be increasing, has now been stabilizing at 17 to 18 percent, we expect that the 4 or 4.1 percent economic growth may be the bottom because we are expecting to see GDP increase,” He added.
By: Pius Amihere Eduku/citifmonline.Ghana